BILL ANALYSIS Ó SB 668 Page 1 SENATE THIRD READING SB 668 (Fuller) As Amended June 27, 2013 2/3 vote. Urgency SENATE VOTE : 37-0 SUMMARY : Ratifies a tribal-state gaming compact (Compact) entered into between the State of California and the Fort Independence Indian Community of Paiute Indians, executed on February 28, 2013. Once effective (legislative ratification and federal approval required), this Compact will be in full force and effect for state law purposes until December 31, 2034. Specifically, this bill ratifies : The tribal-state gaming compact between the State of California (State) and the Fort Independence Indian Community of Paiute Indians (Tribe), located in Inyo County, California, which was executed on February 28, 2013, and allows the operation of up to 800 gaming devices and banking or percentage card games. The Compact makes it explicit that the Tribe shall not be authorized to operate the game known as roulette, whether or not played with or on a mechanical, electro-mechanical, electrical, or video device, or cards, or any combination of such devices, or the operation of any game that incorporates the physical use of a die or dice. The Tribe will share up to 10% of their revenue with tribes that are not gaming or that are otherwise not substantially benefitting from gaming, as defined. The Compact requires regular audits of gaming operations and other enforcement and public safety measures. The Compact includes provisions to protect employees and patrons as well as measures to protect the environment during the construction and operation of gaming facilities. It also funds local programs to mitigate the effect of gaming activities and addresses gambling addiction issues. EXISTING LAW : 1)Provides, under the federal Indian Gaming Regulatory Act (IGRA), for the negotiation and conclusion of compacts between federally recognized Indian tribes and the state for the purpose of conducting Class III gaming activities on Indian lands within a state as a means of promoting tribal economic SB 668 Page 2 development, self-sufficiency, and strong tribal governments. Existing law expressly authorizes a number of tribal-state gaming compacts between the State of California and specified Indian tribes. 2)Authorizes the conduct of Class III gaming activities to the extent such activities are permitted by state law, a gaming compact has been concluded by a federally recognized tribe and the state, and the compact has been approved by the Secretary of the Interior. 3)Limits, under IGRA, the operation of Class III gaming activities to Indian lands acquired on or before October 17, 1988. Existing law also provides for certain exceptions to conduct gaming activities on Indian lands acquired after October 17, 1988. 4)Defines, under IGRA, Indian lands to mean all lands within the limits of any Indian reservation, and any lands title to which is either held in trust by the United States for the benefit of any Indian tribe or individual or held by any Indian tribe or individual subject to restriction by the United States against alienation and over which an Indian tribe exercises governmental power. 5)Requires, under IGRA, the state to negotiate to conclude a compact in good faith with an Indian tribe having jurisdiction over the Indian lands upon which the Class III gaming activity is to be conducted. Existing law also provides the United States district courts with jurisdiction over any cause of action initiated by a tribal government alleging that the state failed to negotiate in good faith to conclude a compact. Furthermore, existing law prescribes the remedy, mediation supervised by the courts, if it is found that the state failed to negotiate in good faith to conclude a compact. Authorizes the Governor, under the California Constitution, to negotiate and conclude compacts, subject to ratification by the Legislature. In total, the State of California has signed and ratified Tribal-State Gaming Compacts with 70 Tribes. There are currently 59 casinos operated by 58 Tribes. FISCAL EFFECT : Unknown SB 668 Page 3 COMMENTS : Background : As per the Compact's preamble, the Fort Independence Community of Paiute Indians (Tribe) is a federally recognized Indian tribe listed in the Federal Register as the Fort Independence Indian Community of Paiute Indians of the Fort Independence Reservation, California (Reservation). The Tribe has originally and continuously inhabited the Owens Valley and Eastern California since time immemorial and the Tribe's current reservation was established on October 28, 1915, by President Woodrow Wilson's Executive Order, number 2264, creating a permanent home for the Tribe on 360 acres of land adjacent to Oak Creek in Independence, California. The Tribe is committed to improving the environment, education status, and the health, safety and general welfare of its members and local residents. The membership consists of 136 tribal members of which approximately half live on the Reservation. The Tribe may engage in Class III Gaming only on eligible Indian lands held in trust for the Tribe, at a single Gaming Facility located within the boundaries of the Fort Independence Indian Reservation as those boundaries exist as of the execution date of this Compact, as described. Additionally, the State and the Tribe recognize that the exclusive rights that the Tribe will enjoy under this Compact create a unique opportunity for the Tribe to operate a Class III gaming facility in an economic environment free of competition from the operation of gaming devices and banked card games on non-Indian lands in California and that this unique economic environment is of great value to the Tribe. In consideration of the exclusive rights enjoyed by the Tribe to engage in the gaming activities and to operate up to 800 gaming devices and the other meaningful concessions offered by the State in good faith negotiations, and pursuant to IGRA, the Tribe has agreed to provide the State, on a sovereign-to-sovereign basis, and to local jurisdictions, fair cost reimbursement and mitigation from revenues derived from the gaming devices operated pursuant to this compact on a specified payment schedule. This Compact will afford the Tribe primary responsibility over the regulation of its gaming facility and will enhance the SB 668 Page 4 Tribe's economic development and self-sufficiency. Furthermore, the State and the Tribe have concluded that this Compact protects the interests of the Tribe and its members, the surrounding community, and the California public, and will promote and secure long-term stability, mutual respect and mutual benefits. Key Provisions of the Compact : 1)Requires the Tribe, prior to the commencement of a "project," as defined, to follow certain procedures and enter into specified agreements (e.g., environmental and intergovernmental) for such undertakings and services that mitigate the impacts of the gaming facility on affected jurisdictions (Town and/or County). 2)Stipulates that the gaming operation or business operation authorized under this compact shall be owned solely by the Tribe and limits the Tribe to the operation of 800 gaming devices on eligible Indian lands held in trust for the Tribe at a single gaming facility located within the boundaries of the Fort Independence Indian Reservation. 3)In addition to any Class II games, the Tribe is authorized to operate gaming devices (slot machines), banking or percentage card games, and any devices or games that are authorized under state law to the California State Lottery. The Tribe may not operate roulette games (table or mechanical) or any game that incorporates the physical use of a die or dice. The Tribe shall not engage in Class III Gaming that is not expressly authorized in the compact. 4)Provides that the Tribe is not required to make payments to the State Gaming Agency for deposit into the Revenue Sharing Trust Fund (RSTF) or the Tribal Nation Grant Fund, if it operates 350 or fewer gaming devices. 5)If the Tribe operates more than 350 gaming devices at any time in a given calendar year it must pay 10% of its Net Win from the operation of those devices in excess of 350 to the State Gaming Agency for deposit into RSTF or the Tribal Nation Grant Fund. The Compact outlines quarterly payment terms, as specified. 6)Requires the Tribe to pay into the Special Distribution Fund SB 668 Page 5 (SDF), on a pro rata basis, the actual and reasonable regulatory costs the State incurs for the performance of all its duties under this Compact. The Tribe's pro rata share will be calculated using the following equation: The maximum number of Gaming Devices operated in the Gaming Facility for the previous fiscal year as determined by the State Gaming Agency, divided by the maximum number of Gaming Devices operated by all federally recognized tribes in California pursuant to tribal-state Class-III Gaming compacts during the previous fiscal year, multiplied by Costs, equals the Tribe's pro rata share. Additional Provisions of the Compact : Patron Protections - The Tribe agrees to binding arbitration before a single arbitrator, who shall be a retired judge, for disputes over patron injuries and gambling. Also, provides that the Tribe agrees to waive sovereign immunity in order to be compelled in federal or state court to abide by the resolution of arbitration. Environmental Protections - The Tribe must prepare a Tribal Environmental Impact Report (TEIR) and negotiate mitigation of any off-reservation impacts. The Tribe's failure to prepare an adequate TEIR when required shall be deemed a breach of this compact and furthermore shall be grounds for issuance of an injunction or other appropriate equitable relief. Also, provides for binding arbitration if an intergovernmental agreement with the County of Inyo or the Town of Independence is not entered into within 75 days of the submission of the final TEIR. Employee Protections - The Tribe has agreed to participate in the state's workers' compensation system and unemployment insurance program and to consent to the jurisdiction of the state agencies and courts enforcing all of those standards. Enhanced Audit and Compliance Review Procedures - In addition to providing for an annual independent audit, the Compact allows the state to conduct its own annual audit and compact compliance review. Inspection and Testing of Gaming Devices - Gaming devices will SB 668 Page 6 have to be tested, approved and certified by an independent gaming test laboratory and the tribal gaming agency to ensure that they are being operated according to specified technical standards. The State Gaming Agency would be authorized to annually conduct up to four random inspections of slot machines in operation to confirm that the gaming devices are operating in conformance with these standards. Minimum Internal Control Standards (MICS) - The Tribe must adopt and comply with standards that meet or exceed the federal National Indian Gaming Commission standards. The MICS are incorporated in this Compact as an appendix (Appendix D), which shall be updated periodically by the State Gaming Agency and Tribal Gaming Agency, to ensure the MICS keep up with changing technology and industry standards. Problem Gambling - The Tribal Gaming Agency must establish a program to mitigate pathological and problem gaming by implementing measures that train supervisors and floor employees on identifying and managing problem gambling. Additionally, the Tribe must include a responsible gaming message in advertising, provide signage and education materials at conspicuous locations aimed at preventing problem gambling, establish self-exclusion and involuntary exclusion programs, and adopt a code of conduct derived from the American Gaming Association's code. Labor Relations - Provides that the gaming activities authorized by this compact may only commence after the Tribe has adopted an ordinance identical to the Tribal Labor Relations Ordinance (TRLO), referenced as Appendix C of the Compact, and the gaming activities may only continue as long as the Tribe maintains the ordinance. If the Tribe employs 250 or more persons in a tribal casino facility, then the provisions of the TLRO become effective. The TLRO provides for a secret ballot election. Tobacco and Alcohol Provisions - The Tribe agrees to provide a non-smoking area in the gaming facility that exists as of the effective date of this Compact and to utilize a ventilation system throughout the gaming facility that exhausts tobacco smoke to the extent reasonably feasible and not to offer or sell tobacco to anyone that is under 18 years of age. Makes it explicit that the purchase, sale, and service of alcoholic beverages shall be subject to state law. Prohibitions Regarding Minors - The Tribe shall prohibit persons SB 668 Page 7 under the age of 21 years from being present in any room or area in which gaming activities are being conducted unless the person is en route to a nongaming area of the gaming facility, or is employed at the Gaming Facility in a capacity other than as a gaming employee. Exclusivity - In the event the exclusive right of Indian tribes to operate Class III gaming in California pursuant to Article IV, Section 19(f) of the California Constitution is lost and other non-Indian entities legally are able to engage in Class III gaming the Tribe shall have the right to terminate this Compact, in which case the Tribe will lose the right to operate gaming devices and other Class III gaming authorized by this Compact; or continue under this Compact. Effective Date - This Compact shall not be effective unless and until it is ratified by the Legislature and notice of approval or constructive approval is published in the Federal Register as provided by IGRA. Once effective, this Compact shall be in full force and effect for state law purposes until December 31, 2034. Also, if this Compact does not take effect by July 1, 2015, it shall be deemed null and void. Related legislation : AB 277 (Hall) of the current legislative session. Ratifies tribal-state gaming compacts entered into between the State of California and the North Fork Rancheria Band of Mono Indians of California, executed on August 31, 2012, and the State of California and the Wiyot Tribe, executed on March 20, 2013. (Pending on the Senate Floor) Prior Legislation : AB 517 (Hall), Chapter 12, Statutes of 2012, ratified the tribal-state gaming compact entered into between the State and the Federated Indians of Graton Rancheria of Sonoma County, executed on March 27, 2012. AB 787 (Chesbro), Chapter 340, Statutes of 2012, ratified the amendment to the tribal-state gaming compact entered into between the State and the Coyote Valley Band of Pomo Indians, executed on July 25, 2012. AB 1418 (Hall), Chapter 412, Statutes of 2011, ratified a revised tribal-state gaming compact between the State and Pinoleville Pomo Nation, authorizing the Tribe to commence Class III Gaming with up to 900 gaming devices, executed on August 8, 2011. Required contributions to the SDF and the RSTF, as SB 668 Page 8 specified, instead of requiring revenue contributions to the General Fund. AB 1020 (Chesbro), Chapter 27, Statutes of 2011, ratified a revised compact between the State and the Habematolel Pomo of Upper Lake executed on March 17, 2011. Authorized the Tribe to operate up to 750 gaming devices with up to 15% of the Net Win from those gaming devices be paid to the SDF and RSTF, instead of requiring revenue contributions to the General Fund. AB 122 (Coto), Chapter 3, Statutes of 2010, ratified the tribal-state gaming compact entered into between the State and the Pinoleville Pomo Nation executed by the Governor on March 10, 2009. AB 3072 (Price), Chapter 334, Statutes of 2008, ratified the first amendment to a tribal-state gaming compact entered into between the State and the Shingle Springs Band of Miwok Indians, executed on June 30, 2008. SB 106 (Wiggins), Chapter 37, Statutes of 2007, ratified a new compact between the State and the Yurok Tribe of the Yurok Reservation. SB 174 (Ducheny), Chapter 39, Statutes of 2007, ratified the first compact amendment to the compact between the State and Sycuan Band of the Kumeyaay Nation. SB 175 (Ducheny), Chapter 38, Statutes of 2007, ratified the first compact amendment to the compact between the State and the Morongo Band of Mission Indians. SB 903 (Padilla), Chapter 40, Statutes of 2007, ratified the first compact amendment to the compact between the State and the Pechanga Band of Luiseño Indians. SB 941 (Padilla), Chapter 226, Statutes of 2007, ratified the first compact amendment to the compact between the State and the San Manuel Band of Serrano Mission Indians. SB 957 (Torlakson), Chapter 41, Statutes of 2007, ratified the first compact amendment to the compact between the State and the Agua Caliente Band of Cahuilla Indians. SB 470 (Ducheny), Chapter 527, Statutes of 2006, ratified the SB 668 Page 9 first amendment to the compact between the State and the Quechan Tribe of the Fort Yuma Reservation. SB 1117 (Burton), Chapter 856, Statutes of 2004, ratified two new and two amended compacts entered into between the State and the following tribes: Coyote Valley Band of Pomo Indians (new compact); Fort Mojave Indian Tribe (new compact); Buena Vista Rancheria of Me-Wuk Indians (amended compact); and, Ewiiaapaayp Band of Kumeyaay Indians (amended compact). AB 687 (Núñez), Chapter 91, Statutes of 2004, ratified amendments to five compacts entered into between the State and the following tribes: Pala Band of Mission Indians; Pauma Band of Luiseno Mission Indians of the Pauma and Yuima Reservation; Rumsey Band of Wintun Indians; United Auburn Indian Communities; and, Viejas Group of Kumeyaay Indians. Provides for the issuance of bonds in an amount not to exceed $1.5 billion by the California Infrastructure and Economic Development Bank and requires the net proceeds of the sale of the compact assets to be deposited in the Traffic Congestion Relief Fund and the Transportation Deferred Investment Fund. SB 930 (Burton), Chapter 802, Statutes of 2003, ratified a compact between the State and the Torres-Martinez Desert Cahuilla Indians. SB 411 (Ducheny), Chapter 790, Statutes of 2003, ratified compacts between the State and the La Posta Band of Diegueno Mission Indians and the Santa Ysabel Band of Diegueno Mission Indians in San Diego County. AB 1385 (Battin), Chapter 874, Statutes of 1999, designated the Governor as the state officer responsible for negotiating and executing compacts between the State and federally recognized Indian tribes located in the state. Ratifies 57 compacts and creates two special funds in the State Treasury (SDF and RSTF) for the deposit of revenues derived from Indian gaming and gaming device licensing fees. SB 287 (Burton), Chapter 409, Statutes of 1998, ratified 11 compacts negotiated between the State of California and Indian tribes that permitted Class III Gaming devices on tribal lands and established a process for ratifying other compacts. SB 668 Page 10 Analysis Prepared by : Eric Johnson / G. O. / (916) 319-2531 FN: 0001348